If investors thought they were finding their footing in a volatile stock market, a new tax, climate and healthcare spending law from Capitol Hill might have them trying again to regain their stability. The Inflation Reduction Act contains a 1% tax on stock buybacks, and a 15% minimum tax for large companies that pay little or nothing in income taxes. That could hit big names like Amazon
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President Joe Biden on Tuesday signed into law the Inflation Reduction Act — the Democrats’ big economic package aimed at addressing climate change, capping drug costs and raising hundreds of billions of dollars through taxes on corporations. The bill’s energy- and climate-focused
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incentives feature rebates and tax credits that will directly impact households. They address heat pumps, appliance efficiency, solar panels, electric vehicles and more. The Inflation Reduction Act will invest $300 billion in deficit reduction and $369 billion in energy-security and climate-change programs over the next 10 years, and is forecast to reduce carbon emissions by approximately 40% by 2030. If the bill becomes law, investors may quickly spot some related impacts. For example, look at the pop in solar-power stocks, electric-vehicle makers and fuel-cell companies on Monday, a day after Senate Democrats ushered the bill through that chamber on a 51-50 vote, requiring a tie-breaking vote from Vice President Kamala Harris. Other results may be tougher to see, like the potential bottom-line drag from a new minimum 15% corporate tax rate. The corporate-tax floor and the 1% stock-buyback tax would have a “minimal impact” on earnings expectations, a Citi
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note forecast Monday. More Federal Reserve interest-rate hikes, inflation’s toll and potential economic slowdowns are still the bigger story, Citi analysts noted. Still, it’s worth knowing the implications of the bill — whose labeling as the Inflation Reduction Act by Democrats has been decried among Republicans as unlikely to prove accurate — as it awaits Biden’s signature.The Inflation Reduction Act’s 1% tax on stock buybacks Along with increases in equity value, companies reward shareholders through stock buybacks …